The world of cyberspace has danger around every corner and peril down every dark alley. Enter NortonLifeLock Inc. (GEN -2.89%) -- a company that's been fighting digital ne'er-do-wells since 1982. As the pandemic drives more people online, and exposes them to greater risk, Norton's seizing new opportunities to protect them -- and potentially profit.

Why people need online security

An August 2019 Harris Poll conducted with IBM surveyed 1,000 adults over 18 in the U.S., and 58% reported they had either first- or second-degree experience with identity theft. It happened to them personally or to someone close to them, they said. They weren't too confident of the ability of merchants and banks to keep their personal information safe, either. Some 70% of respondents said they feared their data would fall into the hands of cybercriminals. 

Shadowy cybercriminal in hoodie

Photo Source: Getty Images

Poll participants expressed a preference for privacy over products -- 53% said a company's secure handling of their personal information had a bigger influence on their decision to do business with an online merchant. Less than half -- 44% -- said the quality of merchants' products and services were more important. 

Lock them out!

Norton LifeLock logo

Image Source: Norton LifeLock Inc.

Norton LifeLock seeks to combat those threats and keep its users' personal information safe. The Tempe, Ariz. company began as an antivirus and malware protection software for personal computers. It has now expanded to include LifeLock identity theft protection, which offers monitoring, alerts, and recovery services. It also provides Norton Secure VPN and SurfEasy VPN for online privacy, and Norton Family, which offers parental control for youngsters' devices, and GPS location monitoring services for tracking. Some may know the company from its former moniker, Symantec Corporation. It became NortonLifeLock Inc. in November 2019.

Its newest offering, Norton 360 with LifeLock, is a bundle of services designed to block cyber threats, and claims to stonewall an overall average of 7 million threats a day.

Norton seems to be shifting its focus purely into the realm of protecting individuals and consumers online. In January 2020, it sold its business-oriented ID Analytics division to LexisNexis for $375 million. 

Safety (or not) in numbers

In the COVID era, with so much going on in cyberspace, Norton seems especially poised to capitalize. More internet traffic equals more vulnerability, equals more need for protection, equals steady business for Norton.

ACI Worldwide (ACIW 0.39%) subsidiary ACI Universal Payments reported that e-commerce sales passing through its system increased 81% in May, the month the WHO declared COVID-19 a global pandemic. It was a huge jump in online sales from the year before, and ACI said most online retailers were ill-prepared for the surge. Some retail sectors saw as much as triple-digit growth, and spiking traffic brought a spike in fraud, the report showed.

Worried woman staring at laptop computer screen

Photo Source: Getty Images

A white paper released by consulting firm Aite Group back in April reported that, before the pandemic, a "large financial institution" forecasted an 8% decrease in fraud for 2020. The onset of COVID changed its tune, however, and it revised the projection to an increase of between 10% and 15%.

A McKinsey & Company study released Aug. 28 reported that online shopping had become customary during the pandemic, and customers said they would continue to do business online after COVID -- with predicted revenue growth in 20 categories from over-the-counter medicine to groceries to fitness to entertainment rising between 15% and 35%. The study also predicted growth between 45% and 100% in the number of consumers who will purchase most or all online from the 20 categories it featured.

Norton says all of this increased traffic opens new opportunities for "bad actors" to wreak havoc. A January joint study by Norton LifeLock and the Harris Poll of 5,020 American adults over 18 showed that more than half of them had been notified that they were victims of a data breach where personal information was compromised. 

Why NortonLifeLock makes a good investment

NortonLifeLock's stock has swung up and down during the pandemic, ending up lower as of late September than it traded at the end of January. But Fools should look less at its short-term stock performance than its long-term opportunity.

Norton LifeLock's trailing-12-month revenue has shrunk more than 20% in the last five years, from $3.1 billion at the beginning of July 2015 to $2.45 billion as of the beginning July 2020. But those sales have grown more profitable in the same period. Trailing-12-month net profit margin expanded from 24.2% in July 2015 to 28% in July 2020, even after you factor out earnings from discontinued operations. 

Norton's main U.S. competition comes from Palo Alto Networks (NYSE: PANW) and McAfee, previously private, which filed for its second IPO Sept. 28. (It plans to list on the Nasdaq under the ticker MCFE.) Here's how those companies match up in terms of revenue and net income over the past few years:

Company FY2017 Revenue FY2020 Revenue  Annual Sales Growth FY2017 Net Income FY2020 Net Income Annual Net Income Growth

FY2020 Net Margin

Palo Alto Networks $1.75 billion $3.4 billion 24.8% ($203 million) ($267 million) (9.5%) N/A
NortonLifeLock $4 billion $2.5 billion (14.5%) ($106 million) $578 million*



McAfee $2 billion $2.8 billion** 11.9% ($686 million) $62 million** N/A 2.2%

Source: S&P Capital Intelligence, McAfee Corp 2020 S-1 SEC filing.
* Adjusted net income, excluding income from NortonLifeLock's discontinued operations.
** McAfee FY2020 numbers are run-rate estimates based on performance from the first half of its ongoing 2020 fiscal year. 

Even as Norton's revenue has fallen, it's posted much stronger net income, net margin, and bottom-line growth than its two main rivals, despite their faster-growing sales. We'll have to wait and see whether NortonLifeLock's profits keep rising once it's fully shed its legacy operations. 

The worldwide cybersecurity market was worth $112.01 billion in 2019, and industry analysts project it to rise to $281.74 billion by 2027. It's predicted to show a compound annual growth rate (CAGR) of 12.6% from 2020 to 2027. Norton seems poised to prosper in this environment, with an increased emphasis on providing a complete cybersecurity protection umbrella in one convenient place. 

NortonLifeLock projected that Q2 FY 20201 would bring revenue between $615 million to $625 million, representing 3% to 5% year-over-year growth once adjusted for the effect of divested businesses. Again, that's not a lot, but one has to look at the big picture. With the preponderance of online shopping here in the COVID era, and the potential of a continuance and even an increase on the other side of the pandemic, NortonLifeLock could be a good buy-and-hold stock.